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Crude Oil - 06/11/2020

Micro Analysis

06 November, 2020

For General Information only. Not Intended to Provide Trading or Investment Advice. Your Capital is at Risk.

MID-TERM TREND: DOWN

CRUDE OIL MARKET OVERVIEW:

  • Crude oil continued to move below the mark of 40.0, pressured by the rising coronavirus cases, leading countries to resume lockdowns that could hurt fuel demand. Crude oil managed to test its highest rate since early March 2020 on August 26 (43.75). However, Crude oil prices have remained under negative pressure ever since, breaking below the mark of 40.00 a few times, testing its lowest rate late May (33.61) on November 2.

DEMAND WORRIES REMAIN IN PLACE:

  • Oil’s upside potential may remain capped at levels above 40.00 as coronavirus cases continued to rise across the world, leading countries to resume partial lockdowns that could hurt fuel demand. New outbreaks are reported in several countries, prompting governments to impose restrictions again. In November, several countries in Europe entered new lockdowns including France, Germany, Italy and the UK.
  • The world printed another record one-day increase of new daily coronavirus cases on November 5, 2020 (608443) reminding the authorities that the virus is still present and more restrictions might be needed in order to contain the virus. The US printed a record daily COVID-19 cases on November 5 (118204).

US PRESIDENTIAL ELECTION:

  • No winner is declared yet and many say that the winner might be declared after court processes. To this end, uncertainties are expected to prevail. If Arizona given to Biden, as he leads there, Democrat Joseph Biden Leads Donald Trump 264 vs. 214 electoral votes. Democrat Joseph Biden will need only to win an additional outstanding state, such as Nevada (6 electoral votes) where he is leading. If Joseph Biden wins the markets believe that he will make a new nuclear deal with Iran and will lift sanctions on Iran to let more oil back to the oil markets. Bigger oil supply could prove negative for oil prices. If, however, Donald Trump pulls off another upset as same as in 2016 and wins a second presidential term, Iran may remain under sanctions, which could continue to provide support to oil prices in the months ahead.

Mid-Term Technical Outlook

  • From technical perspective, Crude oil could be expected to remain under negative pressure as suggested by the daily RSI, which remains below the mark of 50.00.
  • Moreover, Crude oil has insisted to stay below the 200 Day Exponential Moving Average, which could be an additional bearish signal.
  • If the analysis manages to live up to the technical expectations, the Crude oil price may retreat and eventually target Support 1 of 35.00.
  • If, however, the analysis fails to live up to the expectations and price extends its rally, Crude oil may target Resistance 1 of 42.00.


Graph: (Crude Oil, Daily)

Current Price: 38.55

Crude Oil

Mid-Term

Trend direction

DOWN

Resistance 3

45.00

Resistance 2

43.50

Resistance 1

42.00

Support 1

35.00

Support 2

33.00

Support 3

30.00

Example of calculation based on trend direction for 1.00 Lot*

Crude Oil

Pivot Points

Resistance 3

Resistance 2

Resistance 1

Support 1

Support 2

Support 3

Profit or loss in $

-6,450.00

-4,950.00

-3,450.00

3,550.00

5,550.00

8,550.00

Profit or loss in €**

-5,446.58

-4,179.93

-2,913.29

2,997.73

4,686.59

7,219.88

Profit or loss in £**

-4,146.39

-3,768.36

-2,626.43

2,702.56

4,225.13

6,508.98

Profit or loss in C$**

-8,426.02

-6,466.48

-4,506.94

4,637.58

7,250.30

11,169.38

* 1.00 lot is equivalent of 1000 units
** Calculations for exchange rate used as of 9:25 a.m. (GMT) 06/11/2020
Fortrade recommends the use of Stop-Loss and Take-Profit, please speak to your Senior Account Manager regarding their use.
*** You may wish to consider closing your position in profit, even if it is lower than suggested one
**** Trailing stop technique can protect the profit – Ask your Senior Account Manager for more details

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